The next week will be all about retail, with Ted Baker, Dunelm’s cushion seller, and DS Smith, the delivery boxes manufacturer, being prominent.
We are back in September, so it’s great to be back on track after an August that was quiet for corporate events, with McBride, Vistry, and Morrisons all dropping results.
All the excitement in macro is reserved for the final.
Friday is a short-term indicator day in the UK. They announce the monthly GDP [gross national product], industrial & manufactured production and trade data. The most important number is the GDP. Marshall Gittler, BDSwiss, suggested that a steady increase in GDP despite newspaper images of empty shelves at supermarkets would be reassuring for the market and could help GBP to rally.
The GDP is expected to rise 8.5% year-on-year in July. This would normally be a remarkable number, but it comes after June’s 15.2% increase. It might be considered a little underwhelming.
The manufacturing production was up 0.2% in June and is expected to increase 0.1% in July. Meanwhile, industrial production is expected to grow by 0.3% following June’s 0.5% rise.
From June’s PS2.5bn, the balance of trade appears to be increasing to PS3bn by July.
The week starts off gently with new car sales data, and the construction purchasing manager’s index (PMI), data released on Monday in the UK. However, the US will be celebrating one of its rare public holidays.
The July new car sales were down 29.5% year-on–year. However, it is expected that August will see a decrease of around 16%.
The August Construction PMI, one of those indices at which the 50.0 level represents the crossing point between expansion or contraction, is expected to be 55.6. This is down from 58.7 in Juli.
The Halifax House Price Index will release the UK’s housing market temperature on Wednesday. Spoiler alert! The market is still very hot. The July prices were 7.6% higher year-over-year. With the end of the Chancellor’s ill-advised stamp duties giveaway, economists believe that the annual increase will be around 7.3%.
McBride may be a good choice for investors.
McBride PLC, LSE:MCB has already set the market for a disappointing outlook by releasing its full-year results Tuesday.
Problem is not June, but the current fiscal years that the cleaning products and own label group warned about a few weeks back.
Profits in the year up to June 2022 could be as low as 65% compared with market estimates of PS19.7mln.
It stated that “the raw material environment remains extremely difficult both in terms of extraordinary price increases and availability.”
It will be interesting to see how successful it is in passing on some of these costs. When it starts to feel some relief from the pressure, however, it should also keep an eye out for warnings about possible shortages.
Ted Baker will still be in style for investors.
Ted Baker PLC (LSE:TED) will release a trading update Tuesday. Investors will be able to get reassurance about its turnaround plans.
The pandemic hit the fashion designer’s business model long before it was affected.
Ted Baker is concerned about the decline of department stores. This is due to the large number of concessions offered and the fact that bricks and mortar stores are expensive to run. According to Susannah Streeter (senior analyst at Hargreaves Lansdown), the group has been cutting its costs as quickly as it’s been cutting occasionwear ranges. It’s also making progress in improving its buying practices.”
Its online sales need to be significantly increased so any progress here will be vital and will be a key indicator. Management was able to turn the group’s fortunes around by issuing PS100 million worth of new shares. But the team now has to deliver the goods.
DS Smith reveals quarterly trends
As the online pandemic roared in online retail, the momentum is expected to continue through the first quarter of the cardboard box maker DS Smith PLC (LSE :SMDS), which reports Tuesday.
Hargreaves Lansdown analyst Laura Hoy stated in a note that she expects to see a significant year-over-year increase in volume for the first quarter due to pandemic-related weakness. The group should be close to pre-pandemic levels which would put it on track to surpass 2019 sales.
“Volumes increased in the second half last year, but management raised concerns about inflation.”
“The increase will be seamlessly passed on to customers. Most of them will probably stomach the higher price. Although three months is not enough time to declare the strategy solid, investors should have an idea next week of how things will pan out.
Construction of Vistry’s interims
Vistry Group PLC, the housebuilder previously known as Bovis Homes (LSE:VTY), has already made some money on July’s first-half trading. The focus of the interims will now be on the missing elements from the July update. Those are profitability and full-year guidance.
UBS projects earnings before interest, tax and capital of PS173mln. This includes contributions from joint ventures.
This would mean an operating margin at 13.6%. UBS notes that the market consensus is for an operating margin of 14.1%.
For Tuesday’s interims, the Swiss bank forecasts a profit before taxes of PS161mln
UBS stated that “We believe house price inflation continues in excess of pressures in material supply chains, and weekly reservations remained between 0.7-0.8x.”
Dunelm’s investors might be difficult to comfort
Dunelm customers spent 2020 comfortably on their backsides, but now investors are sitting on the bones.
The share fell by around 15% over the past year, as the soft furnishings company lost its popularity as a lockdown play and investors sought out more exciting recovery opportunities.
Analysts at AJ Bell stated this week that even “very optimistic” trading updates did not attract back interest.
“Soft furnishings and homewares retailer Dunelm’s model was ideally suited for the pandemic – and lockdown-blighted years of 2020. As its website kept customers serviced and those customers spent money to their house, which could have otherwise gone on holidays,” AJ Bell said.
Investors’ affections have switched in 2021 to firms that may see a quicker recovery, even though their profits, sales and cash flow took a huge hit during the worst viral outbreak.
The fourth-quarter trading statement is the latest positive update for July. There’s expected to be some interest in Dunelm’s results on Wednesday. However, it could prove to be a tough crowd.
Do Morrisons have any more amazing updates?
Wm Morrison Supermarkets PLC, (LSE:MRW) is due to report its half-year results on Thursday. This could be one of the shortest promotions ever to the FTSE 100.
Although the grocer’s entry to the big league was confirmed on two days ago, it is not a part of the ongoing bid battle between US private equity firms.
Clayton, Dubilier & Rice is currently in pole position. Its latest bid is the highest and is worth 285p per Share or PS7bn total. However, there’s still time for Fortress or another bidder to return or for someone to join the fray.
Morrison’s management seems to be open to accepting anything above 250p. The results will likely be plain vanilla, but should at least give an insight into what bidders are buying as well as where it could go in the future.
Online channels are rapidly growing, while wholesale is becoming more essential as eCommerce demands increase.
Morrisons also own the stores, and it is possible that one of the bidders will be reminded of their value in the balance sheet.
STV’s interims: Switching on
Analysts believe it will be a pleasant viewing experience for investors.
This release follows a positive pre-close update which highlighted strong trading and significant operational improvements.
Later, the TV channel announced that the STV Player had its largest ever content partnership. It added 1,200 hours of drama and factual content in the next 12 month and divested its non-core lottery management company.
Market participants will be able to expect information on these dynamics, as well as updates on trading activity and forecasts for the rest of the year.
Shore Capital, a house broker, stated that STV is a well-managed and entrepreneurial business with clear potential to grow its position in Scottish commercial TV broadcasting as advertising spend recovers. It also has the potential to deliver transformative growth across its digital production and digital operations. He also emphasized that STV was committed to sustainability, diversity and inclusion.
We expect a 12% increase in EPS year-on-year during 2021. This is due to a combination top-line growth, margin expansion, and three-year adjusted DPS and EPS growths of 39% and 64%. Additionally, robust cash generation will be able to deliver a net cash position by the end of 2023, which could allow us to finance content production acquisitions or investments.
Mark Announcements expected for week ending 10 September:
Monday 6 September:
Finals: Dechra plc
Economic data: UK PMI Construction, UK new car sales
Tuesday 7 September:
Finals: McBride PLC (LSE:MCB)
Interims: Bango PLC (AIM:BGO, FRA:B10), Gamma Communications (AIM:GAMA) plc, James Fisher plc, Lamprell PLC (LSE:LAM, OTC:LMPRF), Luceco PLC (LSE:LUCE), Parsley Box plc, Vistry Group PLC (LSE:VTY)
Trading announcements: Safestore plc, Ted Baker PLC (LSE:TED), DS Smith PLC (LSE:SMDS)
Economic data: UK retail sales, Halifax house price index
Wednesday 8 September:
Finals: Dunelm plc, Frontier Developments (AIM:FDEV) plc
Interims: Bakkavor plc, Inspecs Group plc, Pebble Beach plc
Trading announcements: Biffa PLC (LSE:BIFF)
Thursday 9 September:
Interims: Cairn Homes plc (LSE:CRN), Destiny Pharmaceuticals plc, Energean Oil & Gas plc, Jadestone Energy PLC (AIM:JSE), WM Morrison plc, Spire Healthcare plc, STV Group (LSE:STVG) plc
FTSE 100 ex-dividends to knock 1.09 point off the index: Croda International PLC (LSE:CRDA), Avast PLC (LSE:AVST), Polymetal International PLC (LSE:POLY), CRH plc
Economic data: US initial jobless claims
Friday 10 September:
Economic data: UK balance of trade, UK construction output, UK industrial/manufacturing production, UK GDP
